Entrepreneurs need not apply: Companies shun the self employed

Written by

Vickie Elmer

June 28, 2013

Self starters are being left in the dark. (Reuters/Lee Jae Won)

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Written by

Vickie Elmer

June 28, 2013

In this economy, some unlucky workers are getting snubbed—twice.

Recession prompted millions of laid off workers and new graduates to jump into self-employment—some with enthusiasm and others with reluctance because they couldn’t find anything better. Now, according to new research, it seems they aren’t wanted back.

That’s only ironic because company executives and human resources say they want self starters, innovative hires, a certain entrepreneurial spirit.

Entrepreneurs and freelancers attract fewer interview invitations than comparable candidates who have spent the last few years working for someone else, according to research which will be presented to the Academy of Management annual conference in August. In the UK, the self-employed received almost two-thirds fewer interview requests than people with similar professional experience who worked only at employers.

“The choice to become an entrepreneur can result in an involuntary lock-in, a factor that should be taken into account in planning one’s future career,” wrote the five professors from the University of Vienna, Munich School of Management and Erasmus University Rotterdam.

Men who were self employed fared far worse than women at landing job interviews, a difference the researchers cannot explain but say they hope to look into later.

The stigma against the self-employed may indicate that hiring managers just don’t see them as a good fit in their corporate culture. Traits that work for start-ups—risk-taking, taking charge and adopting “unusual points of view”—don’t necessarily work well in corporate careers, the paper noted.

“My hunch is that many entrepreneurs would actually not fit very well into established organizations, although they may be very productive and able managers themselves—as long as they don’t have a boss,” said Philipp Koellinger, an associate professor of economics at the Erasmus University Rotterdam, and one of the study’s authors. “Employers may attach that stereotype to everyone who was self-employed.”

He estimates that approximately one in seven entrepreneurs who started their businesses in the last four years did so because they couldn’t find jobs, and his previous research shows they are considerably less satisfied with their start-up than others. (That 2008-2009 research was called “I Can’t Get No Satisfaction.”(abstract))

In the latest experiment, researchers sent pairs of cover letters and fictional resumes to real human resources management jobs in the UK over two years. In both fictional candidates’ CVs, the skills and training in the first seven years of the “applicant’s” careers were the same, with experience at large- and mid-sized companies. The key difference showed up after 2009: One of them was said to have owned a small HR consultancy with three employees while the other worked in a company’s HR department consulting with different groups.

The latest findings sound a lot like discrimination—except freelancers or consultants have few protections. Judging by a similar reception the unemployed have received, it’s likely best for applicants to sell their entrepreneurial spirit more than the actual record.